A question for anyone that has previous calculated average PE, PB, etc for the entire sector, or entire market.
What is/are the accepted ways to deal with outliers?
To give an extreme example, a company with a market cap of $100m reports a $1k profit, putting it on a PE of 100,000. One such occurrence is enough to completely throw off the numbers for the whole group.
So, what to do?
If exclude, at what point?
If include, what kind of adjustment to make?
While I am at it - the average PE's normally quoted for markets - are these weight adjusted by market cap, or are these truly an average?